Diplomatic progress and restored shipping routes reduce geopolitical risk premium, pressuring oil prices near $68.40.
West Texas Intermediate crude trades at $68.40 in Asian hours, extending losses after easing Middle East tensions cut the geopolitical risk premium. Diplomatic talks between the US and Iran, mediated by Qatar and Pakistan, have reduced supply disruption fears.
Oil prices had risen earlier on concerns over shipping disruptions in the Strait of Hormuz, a key chokepoint for global crude flows. Recent stabilization in the region has allowed commercial tankers to resume transit, normalizing supply chains. Saudi Arabia’s exports have recovered to 90% of pre-war levels, while the UAE has fully restored its oil shipments.
The rebound in regional export capacity follows increased tanker activity and the UAE’s use of a strategic pipeline bypassing the Strait. Market sentiment has shifted as supply risks diminish, weighing on prices.